USD/CAD trades with modest losses around mid-1.3700s, focus remains on US CPI and Fed

• USD/CAD extends the overnight retracement slide from over a one-month peak. 
• An uptick in Crude Oil prices underpins the Loonie and exerts downward pressure. 
• Reduced Fed rate cut bets favor the USD bulls and should help limit deeper losses.
• Traders look to the US CPI report and FOMC decision for a fresh directional impetus.

The USD/CAD pair edges lower during the Asian session on Wednesday and currently trades around mid-1.3700s, though the downtick lacks bearish conviction. Spot prices remain well within the striking distance of the highest level since April 19, around the 1.3790 area set on Tuesday, as traders await more cues about the timing of when the Federal Reserve (Fed) will start cutting rates before placing directional bets. 

Hence, the focus remains on the release of the latest consumer inflation figures from the United States (US) and the outcome of a two-day Federal Open Market Committee (FOMC) meeting later today. The Fed decision will be accompanied by updated economic projections, along with the so-called "dot plot", which should offer fresh insight into the US central bank's rate-cut path. This will play a key role in influencing the near-term US Dollar (USD) price dynamics and provide some meaningful impetus to the USD/CAD pair.

Heading into the key data/event risks, growing acceptance that the Fed will keep rates higher for longer amid a strong US labor market and sticky inflation assists the USD in holding steady near a one-month peak touched on Tuesday. This, in turn, could lend some support to the USD/CAD pair and help limit losses. The upside, however, seems limited in the wake of an uptick in Crude Oil prices, which tends to underpin the commodity-linked Loonie. Nevertheless, the mixed fundamental backdrop warrants caution for aggressive traders. 

From a technical perspective, the recent breakout through the 1.3740-1.3750 supply zone was seen as a fresh trigger for bulls. Moreover, oscillators on the daily chart are holding in the positive territory, suggesting that the path of least resistance for the USD/CAD pair is to the upside. Hence, any subsequent slide could be seen as a buying opportunity and remain cushioned.